FHA finally does it!!! New program waiving waiting period for extenuating!!!!

[suek]

New program as of August 15.

FHA is waiving waiting periods for extenuating circumstances related to foreclosure, bankruptcy, short sales.
Google it, I tried to paste the doc, but the forum didn't allow it!!!!

Sue

[pinkpeanut01]

I did what you said - I googled it - and you are right! Wow!

"FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.
As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.
To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:
 certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;
 the borrower has demonstrated full recovery from the event; and,
 the borrower has completed housing counseling."

portal.hud.gov/huddoc/13-26ml.pdf

[pinkpeanut01]

Just got done reading the entire pdf. It reduces the waiting period to 12 months for foreclosure, short sale, BK as long as you can fully document it was related to an economic event (job loss). Your credit has to have been good prior to the event that triggered your financial issues. You have to have experienced a 20% loss in income for at least six months, which must be documented. And you must have 12 months of satisfactory credit since the economic event. So basically if you qualify for a mortgage in every other way other than the required seasoning periods after your "event," this reduces that seasoning period.

While it's exciting in theory, I wonder if lenders will actually pull the trigger and loan to people like us.

Edit to add an article link: http://themortgagereports.com/13372/...rtgage-program

[justbroke]

Except for the reduction in the waiting period, the extenuating circumstances has always been a way to get an FHA loan. Please remember that the lending banks can still require additional seasoning since FHA publishes guidelines that allow the banks to tweak.

Okay, now that I wrote that... yes, this could be a good thing and make it easier in some cases.

[suek]

Previously FHA did not consider a job loss to be "extenuating circumstances".
with this new program they do....I think this will help a LOT!
There are so many people that lost jobs in the great recession, and could not find another ......I know this from experience!!!

Sue

[justbroke]

Personally, I'd like to see how the FHA-insured banks are handling this. They have been notorious for requiring additional seasoning. I do agree that loss of income is a "new" extenuating circumstance, but I have read some cases where the bank allowed it (combined with other factors).

I'm anxious to see how this plays out! I'm just afraid this will be another "HAMP"/ "HARP" program with few success stories. I am sure the brokers are just clamoring to get loans signed. I wish the program success since it has been very disheartening for those that have been bankrupt and waited YEARS for their home to foreclose.

[suek]

Well I am going to give it a whirl.....will report back if I have success!

Sue

[justbroke]

Thank you for volunteering!

[suek]

No problem! I already have a broker working on it.
His initial reaction was the same as yours, Just Broke, saying it is not unusual for FHA to come out with a program and the banks just don't go for it.
He ran my credit and thought we might have a shot.....said he would call around and see if the banks bite...
Results in a couple of days....

Sue

[chrisdfw]

No problem! I already have a broker working on it.
His initial reaction was the same as yours, Just Broke, saying it is not unusual for FHA to come out with a program and the banks just don't go for it.
He ran my credit and thought we might have a shot.....said he would call around and see if the banks bite...
Results in a couple of days....

Sue

Best of luck, Can't wait to hear... hopefully good news.

[grisandole]

Does loss of income/credit status due to divorce count as an extenuating circumstance? I got half of some debts and filed mainly due to that; was a stay at home mom during marriage, so did not have a job when I got the divorce (got one asap, of course) and my modest income was not enough to survive on and pay old debt. No home foreclosure or anything. It was actually a small amount that I filed on, because my wages were being garnished from old CC debt.

[tobee43]

yes, the best of luck to you sue. not to put a damper on this, but again as jb points our it's the lending institute that has the final decision. the problem which still may occur is when the actual lender having the final say still refuses to lend. but, lets thing positive here!! go get that loan

[suek]

Oh Tobee, you always think positively!!!!

I am trying to stay positive....I couldn't believe it when I saw the announcement.

Haven't heard anything yet, but the mortgage guy seems really upbeat on this one.

Before this announcement, same guy said 3 year wait........no chance of earlier even with perfect credit. And large down payment.

This seems to be an "in" for those of us who had very good credit before and after a job loss in the "great recession".

I will definitely keep everyone posted!

Sue

[tobee43]

make certainly you do! we'll be having all our fingers and toes crosses from you

[suek]

So far, two brokers have said that they will need to wait 30 days or more to see if the big banks bite on the new program.

Another broker tells me that since my house was IIB, there was no foreclosure, and even if there was he tells me that an FHA loan was always possible with extenuating circumstances. Extenuating circumstances can now be loss of income due to job loss. He tells me he can get this done and will issue a preapproval letter tomorrow................
And so the saga continues..............

Sue